Sanctions Take Effect: Iran Begins Stockpiling Food

With financial sanctions against it getting tighter and tighter and the drums of war beating louder and louder, Iran appears to be getting proactive — at least on the food front. As Reuters reports, Tehran is busy stockpiling grain in anticipation of the sanctions’ effect on daily life. From the Reuters report:

Vessels carrying at least 360,000 metric tonnes (396,832 tons) of grain are lined up to unload in Iran, Reuters shipping data showed on Thursday, a sign that Tehran is succeeding in stockpiling food to blunt the impact of tougher Western sanctions.

Iran has been shopping for wheat at a frantic pace, ordering a large part of its expected yearly requirement in a little over one month and paying a premium in non-dollar currencies to work around toughened Western sanctions and avoid social unrest.

Food shipments are not targeted under western sanctions aimed at Iran’s disputed nuclear program, but financial measures have frozen Iranian firms out of much of the global banking system.

Since the new year, some vessels had turned away from Iran without unloading after Iranian buyers were hit by a trade finance squeeze, but Thursday’s data appears to show that shipments are now arriving successfully.

Meanwhile, this stockpiling is having the unintended consequence of helping American wheat growers and the US economy. As Reuters notes in another article, Iran’s stockpiling includes buying large amount of wheat from the land of amber waves of grain:

Iran has purchased 60,000 metric tonnes (66,139 tons) of U.S. wheat, the U.S. government said on Thursday, raising the two-week tally to 180,000 metric tonnes, which industry sources said reopened grain trade ties between the two countries embroiled in a stand-off over Tehran’s nuclear ambitions.

Iran’s purchases of U.S. wheat this year are its first in three years, and the sources said the OPEC member was close to completing purchases of another 220,000 metric tonnes to be shipped as early as April, and in talks with exporters to buy another undisclosed amount.

The price tag for the 400,000 metric tonnes — 180,000 confirmed and 220,000 yet to be formally declared — could be around $160 million, export sources said.

Prices were believed to be above world market prices by around $25 to $30 per metric tonne to account for the greater risk shipping grain to the volatile region.

Trade sources said grain giants Cargill Inc. and Bunge Ltd were the likely suppliers to Iran, but the two companies declined to comment.

The two companies were also major sellers of wheat to Iran three years ago when Iran, normally self-sufficient in wheat, imported nearly 7 million metric tonnes on the world market, including 1.8 million metric tonnes from the United States.